Post date: Jun 22, 2010 11:51:58 PM
DESPITE the generally soft sentiment in the commercial property market, there are a number of projects underway in Kuala Lumpur and the Klang Valley slated for completion over the next two years.
Most of these new retail projects are of smaller scale and located in the suburban areas. Subang Avenue in Subang Jaya has an estimated net lettable area of 250,000 sq ft, SSTwo Mall in SS2 Petaling Jaya (463,000 sq ft), 1 Shamelin in Cheras (420,000 sq ft), Citta Mall in Ara Damansara (424,000 sq ft), Solaris 2 in Dutamas (300,000 sq ft) and Viva Homes in Jalan Loke Yew (688,000 sq ft).
In Kelana Jaya, a new project Taragon Kelana Commercial Centre was launched last week for completion in the third quarter of 2011.
The project by Blackstone Seven Sdn Bhd, a unit of Allstones Group Asia, comprises five retail lots, eight blocks of shop offices and 60 office suites with a gross development value of RM80mil. Located on 1.1 acres, it is targeted for completion in the third quarter of 2011.
Allstones chairman K.H. Sim says the office suites range from 1,045 sq ft to 1,388 sq ft and priced at RM407 per sq ft. Every unit comes with a free carpark.
According to Sim, more than 60% of Taragon Kelana has been sold. “The trend for small businesses now is to own their offices in a secured environment instead of renting in upper floors of shop houses. This is a niche market we are targeting,” he says.
DTZ Research, in its latest Property Times report, says while prospects in the retail sector are positive, rentals are expected to remain soft especially in the suburban areas given the completion of more new shopping centres.
The lively food and beverage sub-sector continues to provide support to rental rates.
CB Richard Ellis Malaysia executive director Paul Khong says the office market is also seeing more new developments including the advent of a new generation of green buildings.
Generally these green office spaces can fetch rental premiums of at least RM1.50 per sq ft on top of the average rates of RM5 to RM6.50 per sq ft.
New office buildings to be completed this year include Menara Waqaf with 340,000 sq ft of net lettable area, Menara Worldwide (275,000 sq ft), HSBC’s new annexe building (129,000 sq ft), BRDB Tower (223,000 sq ft), Capital Square Office Tower 2 (600,000 sq ft), Menara Kencana (255,000 sq ft) and One Mont Kiara (380,000 sq ft).
Potentially adding to the future supply is a 100-storey skyscraper in Kuala Lumpur proposed by Permodalan Nasional Bhd.
IGB Corp Bhd is awaiting approval to build two high-rise office towers totaling 600,000 sq ft in the last phase of its Mid Valley City development. Construction may commence in early 2010 for completion in three years.
Khong adds that the local commercial real estate market is seeing growing interest from overseas institutions.
Comprising mainly Singapore, Australia, German and South Korean funds, he says they are keen in shopping malls and office buildings that are leased to good tenants.
“These are canny investors with wide experience in the region and when the right opportunity appears they are keen to buy. With further relaxation of the requirements for local equity, Malaysia will continue to attract foreign capital from a variety of sources including sovereign funds and some of the major names in the industry.”
Khong says office rentals are expected to remain competitive this year in view of the 2.4 million sq ft of new supply expected to be completed this year in Kuala Lumpur. As of fourth quarter 2009, the cumulative supply of Grade A office space in the city stood at around 29.9 million sq ft.